The Cement Manufacturers Association (CMA) has announced that cement prices may increase to compensate transportation costs – over the next 6 months. “Just for recovering the fuel cost and transportation charges, that itself will call for a minimum of Rs 25-30 a bag, which is about 8-10 per cent increase in prices,” Shailendra Chouksey, President CMA said.
According to the CMA, H1 FY 19 has registered double digits growth numbers in cement sales. This is the first time since 2010 that cement has registered double digit growth and the industry body, CMA, is looking to use the opportunity to correct prices.
“If not for anything else, there is a very dire need to correct the (cement) pricing. In the last one year we have seen 60-70 per cent rise in cost of fuel. At least to recover some portion of this increase, we need to increase the prices of cement,” Chouksey added.
Combating the surplus in the industry was the biggest challenge according to Chouksey. Out of a total of 500 million tonne (MT) capacity available in the industry, only 300 MT is utilised at the moment. However, with the next six months forecasted for healthy consumption, I think it is a good period for some possible price corrections,” he said.
In the NCR, a 50-kg cement bag sells for less than Rs 300 at present, claiming that these are practically the same numbers in 2011-12. He further added, the health of the cement industry is not good, “We have been seeing that lot of units have been put on the block. It indicates the margins are not very healthy, I think that will continue for a while till such time the prices are corrected.”